Gov. Snyder to make emergency manage call Friday

Michigan Gov. Rick Snyder addresses the media in his office in Detroit, Thursday, Feb. 21, 2013. The governor said that he's at least a week away from deciding if Detroit needs an emergency manager to confront its $327 million budget deficit and $14 billion long-term debt. Snyder told reporters that he considers the city's drastic population loss over 60 years to be the main reason for its financial woes. (AP Photo/Carlos Osorio)

At a news event Thursday, Bing said he spoke to the governor by phone earlier in the day.

“Everybody’s got a pretty good idea of what the announcement will be,” said Bing, who added that he didn’t “immediately” expect Snyder to name the manager.

A state-appointed review team determined that Detroit is in a financial emergency, and Snyder has been mulling whether to appoint someone to confront the city’s $327 million budget deficit and $14 billion in long-term debt.

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Bing said Thursday he has believed since taking office that some kind of outside help is needed to address the city’s finances.

“I’m more interested, instead of fighting Lansing, in working with them,” the first-term mayor said.

The financial review team’s report given to Snyder said the accumulated deficit as of June 30, 2012, would have topped $900 million if Detroit leaders in recent years had not issued bonds to pay some of its bills.

Long-term liabilities, including underfunded pensions, total more than $14 billion, and in recent months the city has relied on bond money from an escrow account to meet its dwindling cash flow needs and to pay city workers. The review team also said that because of its cash deficit, the city would have to either increase revenues or decrease expenditures, or both, by about $15 million per month between January and March to “remain financially viable.”

“The case is all about the numbers,” Bing said of Snyder’s expected decision to name an emergency manager for Detroit. “Anybody who’s been following the numbers in Detroit knows that the numbers aren’t good and they’re not going to change dramatically any time soon. There are things Lansing can do to help to get us out of this situation faster than we can do it by ourselves.”

Snyder, a Republican, has described the fiscal predicament in the state’s largest city as “quite dire” but “solvable,” if the city works with the state and an emergency manager if one is appointed.

If a manager is appointed over Detroit’s finances, that person will have to hit the ground running, said Patrick O’Keefe, president of O’Keefe and Associates, a turnaround consulting firm north of Detroit in Bloomfield Hills.

“Time is not your friend in these situations,” O’Keefe said. “The emergency manager, he’s an army of one. He’s going to have to assemble a team to help him consult and deal with all the issues the city has. If they get the right person, things will happen fast. If you get somebody with understanding and expertise in restructuring, I think within 90 days they’ll have a plan.”

Bing and others have said the city can use the state’s help, but not under a manager.

A stricter consent agreement would be preferable to state oversight, Council President Pro Tem Gary Brown said Friday.

“I think the mayor should push very hard for a new consent agreement with some very strong milestones that every 30 days have to be achieved,” Brown said. “And as long as the mayor and the council are making progress in meeting those milestones then we should be allowed to continue to make progress. And if we’re not making progress you can always pull the trigger.”

But the state complained that the city failed to meet some deadlines under a consent deal approved last spring. That led to a preliminary review of the city’s finances in December that eventually found a serious financial problem existed in Detroit. The review team was appointed to take a deeper look at the city’s books.